What is this calculator?
This calculator works out what a one-time deposit grows to by maturity, and how much of that is interest, for a deposit that compounds at a fixed rate. You choose how often interest is compounded, because that choice measurably changes the result.
Use it when:
- You want the maturity value of a fixed deposit before opening it.
- You are comparing two deposits whose rates are similar but whose compounding frequencies differ.
- You want to isolate the interest component from the principal.
Intended for: Savers comparing term deposits, and anyone modelling a lump sum growing at a fixed rate.
How is this calculated?
- The tenure is converted to a number of years.
- The annual rate is divided by the number of compounding periods per year to give the rate applied at each compounding event.
- That rate is applied repeatedly — once per compounding period, for the whole tenure — with each period's interest added to the balance before the next period is calculated. This is what makes the growth compound rather than linear.
- Interest earned is the maturity value minus the original deposit.
Formulas
Maturity value
A = P × (1 + i / m)^(m × t)
The deposit grows by a factor of (1 + i/m) once per compounding period, for m × t periods in total.
- P
- Principal — the amount deposited
- i
- Annual interest rate as a decimal (e.g. 0.07 for 7%)
- m
- Compounding periods per year (1, 2, 4, 12, or 365)
- t
- Tenure in years
Interest earned
Interest = A − P
The growth on top of the amount you deposited.
Example
A deposit of 100,000 at 7% per year for 2 years, compounded quarterly.
- Quarterly compounding means m = 4, so each quarter applies 7% ÷ 4 = 1.75%.
- Over 2 years there are 4 × 2 = 8 such quarters.
- 100,000 × 1.0175^8 ≈ 114,888.
Result: Maturity value ≈ 114,888, interest earned ≈ 14,888.
Frequently asked questions
Why does more frequent compounding produce more interest at the same rate?
Because interest starts earning interest sooner. At quarterly compounding your first quarter's interest joins the principal and earns for the remaining three quarters; at annual compounding it does not join until the year is over.
Is tax on the interest deducted?
No. Interest on deposits is taxable in most jurisdictions and banks may deduct tax at source. The maturity value shown here is before any tax.
What happens if I withdraw before maturity?
Most deposits apply a penalty rate for premature withdrawal, which is usually lower than the contracted rate. This calculator models a deposit held to maturity only.
Assumptions
What this calculator takes as given:
- The interest or return rate you enter is treated as fixed for the entire period.
- Every period is treated as equal in length; no calendar-day, leap-year, or day-count convention is applied.
- Interest is compounded at the chosen frequency and reinvested into the deposit rather than paid out.
- The deposit is held to maturity.
Limitations
What this calculator cannot know or does not model:
- Tax on interest, including any deduction at source, is not applied.
- Premature-withdrawal penalties and the reduced rates that accompany them are not modelled.
- Banks that pay interest out periodically instead of reinvesting it will produce a different total.
- Preferential rates (for example for senior citizens) must be entered manually as the rate.